Energy strategies, or the lack thereof - Feb 4

How long before the lights go out?David Strahan, The Telegraph Bad news for energy consumers continues to come thick and fast. Bills have more than doubled in the past six years, and could rise a further 25 per cent in the next decade according to a wide-ranging report published yesterday by Ofgem. But even more worrying was the watchdog's analysis of Britain's energy security – or lack of it. Without decisive action, warns Ofgem, there could soon be times when energy is not just expensive but unavailable at any price.

The last time Britain suffered a winter this bitter, the phrase "energy security" meant having a full coal scuttle. Now it's all about natural gas. Forty years ago, few houses had central heating and those that did ran on imported oil. Today, following the North Sea bonanza of the 1970s and 1980s, gas heats almost every home and generates over 40 per cent of our electricity, making Britain the world's fifth largest consumer. Only the US, Canada, Russia and Iran guzzle more.

But these days Britain's gas supply is apparently on thin ice. Until the beginning of this year, National Grid had only once been forced to issue a Gas Balancing Alert – warning the market that supply might not meet demand and urging suppliers to pump harder. Since then it has issued another four... (4 Feb 2010)

Peak Oil Theory: implications for Australia’s strategic outlook and the ADF(pdf)Dr. Matthew Gray, Australian Defense Journal Although crude oil and other hydrocarbons are finite resources, only recently has the concept of ‘peak oil’ been taken seriously as a global threat to standards of living, quality of life and international stability. Peak oil theory argues that at a certain point—probably when about half the exploitable reserves of crude oil have been exhausted—a gradual decline in crude oil output will commence, raising prices markedly, even exponentially. Prices like the July 2008 high of US$147 a barrel will then seem cheap by comparison. Given how many products are derived from oil, the economic impact will be serious and potentially catastrophic. While observers disagree on when a peak might occur, there is growing pressure from the scientific community to take it seriously.1]

The ultimate risk is not from the world exhausting its supplies of oil but rather from the economic, social and political impacts that would come from oil prices rising to a level where they are unaffordable for most current hydrocarbon uses. This would promote inflation or stagflation and encourage international competition—and potentially conflict—for the dwindling, remaining oil. This paper provides an outline of what peak oil theory argues, why it ought to be taken seriously and what this might mean for Australia’s strategic position and the ADF. It argues that the ADF will need to readjust its structure and capabilities and be prepared to undertake new commitments in our region and more widely. The paper seeks neither to be overly pessimistic nor optimistic. Instead, it argues that peak oil is worth taking seriously because of the potential impacts and because of the benefits of acting sooner rather than later. (Issue 180, 2009)The PDF is very slow to load. You need to go to page 28 to access the article. -KS

The Iraqi Oil ConundrumMichael Schwartz, TomDispatch Energy and Power in the Middle East --- How the mighty have fallen. Just a few years ago, an overconfident Bush administration expected to oust Iraqi dictator Saddam Hussein, pacify the country, install a compliant client government, privatize the economy, and establish Iraq as the political and military headquarters for a dominating U.S. presence in the Middle East. These successes were, in turn, expected to pave the way for ambitious goals, enshrined in the 2001 report of Vice President Dick Cheney’s secretive task force on energy. That report focused on exploiting Iraq’s monstrous, largely untapped energy reserves -- more than any country other than Saudi Arabia and Iran -- including the quadrupling of Iraq’s capacity to pump oil and the privatization of the production process.

The dream in those distant days was to strip OPEC -- the cartel consisting of the planet’s main petroleum exporters -- of the power to control the oil supply and its price on the world market. As a reward for vastly expanding Iraqi production and freeing its distribution from OPEC’s control, key figures in the Bush administration imagined that the U.S. could skim off a small proportion of that increased oil production to offset the projected $40 billion cost of the invasion and occupation of the country.

All in a year or two.

Almost seven years later, it will come as little surprise that things turned out to cost a bit more than expected in Iraq and didn’t work out exactly as imagined.

... The entire six-year saga of American energy dreams, policies, and pressures in Iraq has so far yielded little -- no significant increase in Iraq’s oil production, no increase in its future capacity to produce, and no increase in its energy exports. The grand ambition of transferring actual control of the oil industry into the hands of the international oil companies has proven no less stillborn.

Over the years since the U.S. began its energy campaign, production has actually languished, sometimes falling as much as 40% below the pre-invasion levels of an industry already held together by duct tape and ingenuity. In the Brookings Institution’s latest figures for December 2009, production stood at 2.4 million barrels per day, a full 100,000 barrels lower than the pre-war daily average.

To make matters worse, the price of oil, which had hit historic peaks in early 2008, began to decline. By 2009, with the global economy in tatters, oil prices sank radically and the Iraqi government lacked the revenues to sustain its existing expenditures, let alone find money to repair its devastated infrastructure.

As a result, in early 2009, Maliki’s government began actively, even desperately, seeking ways to hike oil production, even without an oil law in place. That, after all, was the only possible path for an otherwise indigent country with failing agriculture in the midst of a drought of extreme severity to increase the money available for public projects -- or, of course, even more private corruption.

... Iraqi oil, too, has been a focus of Washington’s unremitting ambition tempered by failure. Long before the cost of the war began to lurch toward the current Congressional estimate of $700 billion, the idea of using oil revenues to pay for the invasion had vanished, as had the idea of quadrupling production capacity within a few years. The hope of doing so someday, however, remains alive. Speculation that Iraq’s production could -- in the not too distant future -- exceed that of Saudi Arabia may still represent Washington’s main strategy for postponing future severe global energy shortages.

... Perhaps threatened by the possibility that Chinese companies might accumulate the bulk of the contracts for Iraq’s richest oil fields, leaving other international firms in the dust, by December a veritable stampede had begun to bid for contracts. In the end, the major winners were state-owned firms from Russia, Japan, Norway, Turkey, South Korea, Angola, and -- of course -- China. The Malaysian national company, Petronas, set a record by participating with six different partners in four of the seven new contracts the Maliki government gave out. Shell and Exxon were the only major oil companies to participate in winning bids; the others were outbid by consortia led by state-owned firms. These results suggest that national oil companies, unlike their profit-maximizing private competitors, were more willing to forego immediate windfalls in exchange for long-term access to Iraqi oil.

On paper, these contracts hold the potential to satisfy one aspect of Washington’s oil hunger, while frustrating another. If fully implemented, they could collectively boost Iraqi production from 2.5 million to 8 million barrels per day in just a few years. They would not, however, deliver control over production (or the bulk of the revenues) to foreign companies, so that Iraq and OPEC could continue, if they wished, to limit production, keep prices high, and wield power on the world stage.

A professor of sociology at Stony Brook State University, Michael Schwartz is the author of War Without End: The Iraq War in Context (Haymarket Press), which explains how the militarized geopolitics of oil led the U.S. to dismantle the Iraqi state and economy while fueling a sectarian civil war. Schwartz's work on Iraq has appeared in numerous academic and popular outlets. He is a regular at TomDispatch.com. (3 February 2010)Author Schwartz apparently believes that Iran and OPEC can still limit oil prorduction and "keep prices high." The peak oil community is skeptical.

A New Clean Economy — With Old Sources of EnergyBryan Walsh, Time Magazine Since his election, President Barack Obama has emphasized the importance of developing new sources of energy and cultivating the jobs that will come with them. "I am convinced that whoever builds a clean energy economy, whoever is at the forefront of that, is going to own the 21st-century global economy," Obama told a bipartisan meeting of governors at the White House on Wednesday.

But, increasingly, the President's new clean economy seems to rely on old sources of energy. At his State of the Union speech on Jan. 27, Obama coupled calls for comprehensive energy and climate legislation with a mention of the need for offshore oil drilling, and his 2011 budget includes $36 billion in new loan guarantees for nuclear power.

On Tuesday, the White House further announced new steps to boost production of biofuels, which are considered environmentally questionable by many greens, and to expand research into technology that would help capture and store carbon emitted by burning coal. It is an energy program designed to increase U.S. energy independence and to create new jobs but, to the dismay of greens, not necessarily to reduce carbon emissions. "Every American is anxious to have an energy and fuel agenda that puts us back in control of our own energy and fuel future," Agriculture Secretary Tom Vilsack told reporters. "[This is a] clear pathway to energy security."... (4 Feb 2010)The Biofuels Interagency Working group report "Growing America's Fuels" is here

Business as Usual: Hooked on Foreign OilMelinda Burns, Miller-McCune Only 40 mpg by 2035? Current policy ensures long-term oil imports. --- ... The rhetoric has been tough all along, citing national security, the trade gap, pollution and greenhouse gases. What’s been missing, seemingly, is the will to fight for energy independence.

The energy administration’s forecast to 2035, published last month, provides a business-as-usual glimpse of what the country can expect if it doesn’t step up the pace of change. With respect to oil, it shows that the laws, regulations and standards currently on the books would do little to reduce, much less end, America’s addiction to foreign imports for another generation.

Absent any policies aimed at solving the problem, the report shows, net U.S. imports of oil would likely total 9.7 million barrels per day in 2035, or 51 percent of the country’s total oil consumption.

Under a status quo scenario, total U.S. consumption of oil, foreign and domestic, remains near its present level through 2035. Oil accounts for a third of U.S. energy consumption by 2035, down only slightly from 37 percent in 2008, the forecast shows. Biomass fuels from crop residues, grasses, wood waste, vegetable oils, manure and algae — including renewable, less-polluting alternatives to gasoline — would account for only 6 percent of total U.S. energy consumption in 2035.

The energy administration report, called the Annual Energy Outlook 2010 Early Release, is the preview of a full forecast that will be made public in March. (3 February 2010)The report can be found here. -KS

Stop the Green Tech Coup, Military Industry on the OffensiveSam Daly, It’s Getting Hot In Here ... The new gospel of "greening" the armed forces is drawing public money that makes domestic infrastructure handouts look like pennies in a fountain. "Green Jobs" means something else entirely to these folks.

But what's wrong with a greener military? Simply put, war is always an assault on the environment. The US military could become more fuel-efficient and drop from their status as the world's largest single oil consumer. But that wouldn't change the fact that forcibly destabilizing states like Iraq and Afghanistan means a protracted collapse of civil infrastructure that results in mass pollution and environmental disasters, compounded by the toxic devastation wrought by military explosives.

... "Greening" the military, by all indications, is a movement of false solutions. Struck with the overwhelming cost of oil-based fuel, the Air Force plans to transition to 50% coal-to-liquids and biomass synthetic fuel by 2016. That's right, coal-fired bombers and fighter jets. Ingenious! The Navy is pushing a similarly backward approach: GMO biofuels for aircraft; hybrid and eventually all-electric ships. More coal, more nukes, and yet another subsidy for industrial agriculture, arguably the US' most economically and environmentally unsustainable sector. This push for false solutions reveals the deep contradictions of "greening" war.

The Economist gets to the heart of the matter, explaining that the new military industrial agenda "is not a question of preventing climate change, reducing dependence on imported oil, or even complying with President Barack Obama's green agenda. The need for alternative sources of energy is a military necessity." In Afghanistan, it takes 7 gallons of fuel to deliver 1 gallon for use in battle. Fuel supply lines are the US' greatest vulnerability there and in Iraq. (3 February 2010)Also at Common Dreams.

The military is one of the sectors of the economy most actively pursuing green technologies. -BA

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